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Dolat Capital Report
Wholesale numbers in February 2023 are expected to be a mixed bag, strong demand for passenger vehicles, premium bikes, and scooters was offset by muted demand for entry and midlevel bikes and light commercial vehicles.
Enquiries and bookings across segments are improving on back of marriage season demand and recovery in rural spending. Dealer inventory is at a normal level (passenger vehicle 15-20 days, two-wheelers 30-35 days).
Our View :
PVs demand is strong and a high order backlog to drive volume growth in the coming quarters. Domestic two-wheeler business is showing signs of recovery however entry-level bike demand is still in a weaker zone. In commercial vehicle, although current demand was driven by pre-buying, expect it will see some moderation in growth in FY24 due to the ripple effect of high-interest rates in many sectors and cost increase due to the implementation of BS6 Phase 2.
We expect rural demand to pick up from Q4 led by pickup in government spending (ahead of 2024 elections) and strong Rabi sowing (benefitted from adequate water level in reservoirs) and strong prices of all agro products which will benefit players like Hero Moto Corp Ltd., Maruti Suzuki India Ltd. and Mahindra and Mahindra Ltd.
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